Outside of a Small Circle of Friends . . . at ISO New England

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D. Maurice Kreis, NH's Consumer Advocate

Power to the People is a column by D. Maurice Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.

By D. MAURICE KREIS, Power to the People

Warm congratulations to Mark Vannoy on becoming the newest member of the ISO New England Board of Directors.  The rest of this column explains why his election is bad news for New England’s electric ratepayers.

First, a refresher about ISO New England.  It is the nonprofit organization based in Holyoke, Mass., that operates the region’s bulk power transmission system as well as the wholesale electricity markets that cover the region’s six states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.  “ISO” stands for “Independent System Operator.”

These are important jobs and ISO New England is a very powerful organization.  Once upon a time, each of the individual states decided what generation it needed in order to keep the lights on.  But, beginning in the 1980s, policymakers fell in love with the idea of restructuring the electric industry by breaking up vertically integrated utilities and opening up generation to competition.

That requires markets and open access to the transmission system.  Thus, exercising its authority under the Federal Power Act, the Federal Energy Regulatory Commission (FERC) encouraged utilities and other owners of electric facilities to put their biggest assets – generators and transmission lines – under the operational control of what were originally called ISOs and are now known as regional transmission organizations (RTOs).

The key word in the preceding paragraph is “encouraged,” as distinct from “required.”  Because FERC lacked the gonads to order utilities to create RTOs, one of two things happened.  In much of the nation, the utilities simply said, “no thanks.”  Elsewhere, utilities agreed to participate in RTOs but proposed them to the FERC on very utility-favorable terms.

Here in New England, this centered on the perpetuation of NEPOOL – the New England Power Pool.  NEPOOL was formed by the region’s utilities in 1971 to operate the power system jointly and, for that purpose, they built a control center in Holyoke.  When ISO New England was formed, it took over the control center and NEPOOL was transformed into a so-called “stakeholder advisory board” to the new grid operator.

Membership in NEPOOL was opened up to include not just utilities (as transmission owners and retail energy suppliers) but also generators, public power entities like co-ops and municipal electric departments, so-called alternative resources, and end-users.  The small agency I lead – the Office of the Consumer Advocate – is an end-user member of NEPOOL.  Each of these sectors has equal voting power with the exception of Alternative Resources which has slightly less power because it is still developing.

The voting rules are byzantine and, more importantly, calling NEPOOL an “advisory” board is like calling a traffic stop a “suggestion” to pull over.  NEPOOL has the right in key situations to ignore ISO New England and present proposed changes to ISO New England market rules directly to FERC for approval.  And, circling back around to Mark Vannoy, NEPOOL (or, more precisely, the NEPOOL Participants Committee) is a key gatekeeper when it comes to who gets elected to the ISO New England Board of Directors.

Each year, three ISO New England board members are elected to three-year terms.  This year, two incumbents were reelected and there was a vacancy for a new director.

Way back in 2009, the ISO New England Board promised it would “work diligently” to have among their ranks a director with a “background in electric consumer advocacy or retail rate regulation.” The presence of such a person on the Board was supposed to be ongoing.  But in recent years it has not always been so.

The nominating committee, peopled with folks from NEPOOL, the ISO New England Board itself, and one representative of the region’s utility regulators, decided this was the year to get back into compliance with that 2009 commitment.  But the word “or” in the written promise loomed large.  Was getting a consumer advocate on the Board a priority, or would an ex-regulator – perhaps one with a reputation as sympathetic to ratepayer interests — also do? 

Nobody knows, outside of a small circle of friends (to quote the late folksinger Phil Ochs out of context).  The nominating committee worked in secret, got help from a search firm, and came up with Vannoy as their man.

An engineer, Vannoy served as chairman of the Maine Public Utilities Commission from 2012 to 2019.  He was appointed to the Maine PUC by Governor Paul LePage, the famously brash chief executive of the Pine Tree State, whose governing style was often described as similar to that of the current occupant of the White House.  Vannoy resigned at the conclusion of his term rather than seek reappointment from LePage’s successor, Governor Janet Mills.

In the middle of Vannoy’s stint at the helm of the Maine PUC, the state’s largest utility, Central Maine Power, installed a new billing system and promptly found itself in self-induced crisis.  Thousands of customers received erroneous bills.  Some in Maine felt that Vannoy and his two fellow commissioners dithered rather than holding CMP truly responsible.

Vannoy also developed a reputation during his tenure as Maine PUC Chairman of opposing efforts to make solar panels and wind turbines (both terrestrial and offshore) the key to the future of energy in the Pine Tree State.  He was a firm believer that net metering shifts costs from the solar ‘haves’ to the solar ‘have-nots.’

My point is not to reignite arguments about the value of solar power in northern New England, and it is not even to assess Vannoy’s tenure as a Maine utility regulator.  As far as I know, Vannoy is amiable, honorable, and knowledgeable.  Moreover, all he did was express interest in a board seat – a gig for which he was, and is, qualified.

The problem is that everything about Vannoy’s accession to the Board happened in darkness – his selection by the nominating committee as well as the vote on his nomination by NEPOOL.  Although my office is a NEPOOL member, I wasn’t even allowed to discuss any of this publicly until Vannoy’s election was a done deal. 

We need a do-over, next year.  ISO New England is not a country club and its Board is not the Skull and Bones Club at Yale.  Electing new Board members should happen in the sunshine.  And it is time to appoint a director with a history of fighting for ratepayers.

In darkness or in light, keep an eye on ISO New England and its Board.  No utility, no regulator, indeed, no other entity wields such a gargantuan influence on our electric grid and, ultimately, your electric rates.  Here’s to the success of Mark Vannoy as the newest steward of this powerful but all-too-secretive organization.

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